World : European Investment Bank Pumps $5B Into Renewables and Distributed Grid Upgrades

A lot of the money will go toward modernizing the grid to accomodate more variable renewable energy

Renewable energy projects from Western Europe to Southern India are set to benefit from a European Investment Bank financing package approved last month.

The bank, the world’s largest international public lending institution, earmarked €4.3 billion ($5.1 billion) for energy sector initiatives within a €12.4 billion ($14.7 billion) investment war chest covering 53 projects.

“These include onshore wind, hydropower and smart meter projects in Italy, energy efficiency, solar, wind and district heating projects in France, reinforcement and extension of natural gas distribution in Ireland and Spain, and financing of renewable energy in India,” said the EIB.

Natural gas was included in the package because the European Investment Bank (EIB) sees it as a bridge to lower-carbon energy supplies, a bank source told GTM.

As part of the funds that will be distributed by the EIB’s European Fund for Strategic Investments (EFSI), €300 million will go to derisk French new energy technologies as the country looks beyond nuclear.

French renewable energy interests will also benefit from €120 million in financing for Engie France Networks, which in February inaugurated a geothermal district heating plant in the Clichy-Batignolles district of Paris.​

A further €43 million is destined for France's residential energy efficiency agency.

Beyond France, the EIB is looking to lend €100 million to Glennmont Partners, one of the largest specialist renewable energy fund managers in Europe, and €80 million to Italian hydro developer Alperia Hydropower, which is diversifying into wind and PV.

Other disbursements approved last month include €125 million for the expansion of Spain’s natural-gas network and €20 million for an energy efficiency scheme across Spain and Portugal.

Separately from the renewable energy funding package, the EIB last month lent €1 billion to e-distribuzione, a subsidiary of Italy’s Enel Group, to help roll out new smart meters across Italy.

The bank also helped finance an upgrade of the Alliander electricity grid in the Netherlands, through a €300 million loan agreement, and provided €130 million for a 320-kilovolt direct current electricity interconnector between Italy and France.

Diego Pavia, CEO of InnoEnergy, a European energy incubator, welcomed the latest lending package. “This investment is the foundation upon which wider cleantech innovation can flourish,” he said.

“We expect the bulk to be spent on structural investments, such as smart grids or new power production, to better integrate renewables into the grid and enable the transition to a low-carbon energy mix.”

The EIB also offers financial instruments, such as the InnovFin Energy Demonstration Project, designed to support small to medium-sized enterprises, Pavia noted.

“This perfectly complements the work of InnoEnergy by providing our cleantech startups with the access to finance they need to scale,” he said.

An undisclosed amount from the latest funding round will go to energy projects in India, including cash to upgrade the metro system in Bangalore.

“This money is likely to go to funding transmission infrastructure development for solar and wind, and perhaps for rooftop PV,” said Madhavan Nampoothiri, managing partner of Aspiration Cleantech Ventures, a clean energy asset development and management firm.

The exact impact of the financing package would be “difficult to say,” he said. Indian renewable energy interests have recently received significant commitments from development banks, but the results of the funding have yet to be seen in a tangible way.

In June, for example, the World Bank lent $625 million to the State Bank of India, to help fund at least 100 megawatts of grid-connected rooftop solar capacity.

In May, meanwhile, the Asian Development Bank signed a $500 million loan with the Punjab National Bank, destined for commercial and industrial rooftop solar developments.

The success of these financing packages “will all come down to their ability to find good-quality projects that will help the industry as a whole,” said Nampoothiri.